Starting your own business can be exciting, but it’s not without its stresses. There are a lot of different aspects of the business to juggle and your ability to multi-task and stay focused will be tested to the limit. We look at what the banking options are for small businesses.
If you are running a small business alongside your regular job, it is a good idea to set up a business bank account (at the outset) to accept payments and pay invoices.
If you use your personal bank account for your small business, you may find the line between business and personal transactions becomes smudged and you could lose track of your finances.
Your business finances will need to be kept separate because you will need to pay taxes on your earnings and pay suppliers. You will need to evidence this in your abbreviated end of year accounts.
If your business is incorporated as either a limited company or LLP, then legally you are required to separate your personal finances and business finances. They are separate legal entities and therefore you will need to set up a business account before you can start trading.
However, if you are running a partnership or if you are operating as a sole trader, then there is no legal reason to open a business bank account. There are still lots of reasons that having a business bank account will make your life easier, especially when it comes to preparing your end of year accounts.
Even if your personal bank is fine with you using it for business purposes, there are many reasons you might want to create a division between your personal and business bank accounts. These include:
Many small, and micro, business owners use Apps to log transactions and receipts and to manage their books. If your business rapidly grows you could find you go past the point where these Apps are a help and using them could become an onerous and time-consuming task. An Accountant will ensure your figures are correct and in the required presentable format for submission to the HMRC.
There are many benefits to hiring the services of an accountant. They will be able to help you with financial projections, look for opportunities where you could save money on your business banking, budgeting and small business insurance, and ultimately and help your business grow.
For more in-depth information about small business banking please consult your Accountant and your Bank Manager for advice.
Caunce O’Hara & Co Ltd do not provide financial advice or advice regarding business banking. For advice regarding your business banking please speak to your bank manager or your bank’s business relationship manager.
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